Edward DeMarco Stop Standing In The Way Of Homeowner Relief

March 1, 2012

Isaiah J. Poole

Today, we are calling on the acting head of the Federal Housing Finance Agency, Edward DeMarco, to either move or be removed: Stop standing in the way of the mortgage relief millions of homeowners need.

Right now close to three out of every 10 homeowners are underwater on their mortgages — they owe more than their home is worth. If you’re one of those three—or know someone who is—you know an underwater mortgage is like an anvil chained to your leg, holding you down financially.

Worse, these homeowners can’t take advantage of lower interest rates, and as more of them are forced into foreclosure, the values of other homes in the neighborhood are dragged underwater as well. Multiply that by millions and you have an entire American economy struggling to stay afloat.

That’s why Federal Reserve governors and leading economists conclude that reducing underwater mortgage principals to what the homes are actually worth is essential if we are to revive the economy and improve the finances of millions of families.

DeMarco is said to be “philosophically opposed” to the idea of Fannie Mae and Freddie Mac doing mortgage write-downs. This makes no sense, for write-downs —by the agency’s own reports—would save taxpayers $28 billion compared to the cost of foreclosures. Plus, they would help revive the economy. (Our fact sheet offers more details on DeMarco’s actions and the case for principal reduction.)

“For several years, economists and experts on the housing and securities markets have called for targeted write-downs in the balances of mortgage principal owed by some underwater homeowners,” the letter reads. “Despite this weight of expert opinion, you have refused to permit Fannie Mae and Freddie Mac to write down the principal balances of any underwater mortgages, even in cases where it can be demonstrated that doing so would yield the greatest long-term savings for taxpayers. … Your unilateral decision to block all forms of principal write-down has prevented the housing market from recovering more quickly.”

The co-chairs of the congressional Progressive Caucus, Reps. Raul Grijalva and Keith Ellison, have also sent their own letter calling on DeMarco to support principal reduction.

“Underwater homeowners need justice,” Grijalva and Ellison said in their letter. “Write-downs are about keeping families in their homes and saving taxpayers money by preventing foreclosures. Simple, straightforward principal reductions are a good way to prevent the foreclosure crisis anchor from dragging down the U.S. recovery.”

We can’t let Edward DeMarco drag millions of homeowners and the entire economy underwater. Make sure DeMarco gets the message: Support mortgage write-downs for struggling homeowners—or make way for an appointee who will.

The Senate today launched into what's known inside the Beltway as a "vote-a-rama." We already know how this drama ends when it comes to actions that would advance the goal of shared prosperity.

About Isaiah J. Poole

Isaiah J. Poole has been the editor of OurFuture.org since 2007. Previously he worked for 25 years in mainstream media, most recently at Congressional Quarterly, where he covered congressional leadership and tracked major bills through Congress. Most of his journalism experience has been in Washington as both a reporter and an editor on topics ranging from presidential politics to pop culture. His work has put him at the front lines of ideological battles between progressives and conservatives. He also served as a founding member of the Washington Association of Black Journalists and the National Lesbian and Gay Journalists Association.